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HomeMy WebLinkAbout1985-04-08 CC MIN Special Meeting315• • STILLWATER CITY COUNCIL SPECIAL MEETING APRIL 8, 1985 The meeting was called to order by Mayor Peterson. Present: Councilmembers Bodlovick, Kimble, MacDonald and Mayor Peterson Absent: Councilmember Junker Also Present: City Coordinator Kriesel City Clerk Johnson Press: None Others: Walt Hartman, Kit Carlson, Lisa Warner, Don Nolde, Ron Langness PROPOSED TAX INCREMENT FINANCING PLAN FOR THE CITY OF STILLWATER. KIT CARLSON, of Washington County HRA, was present to explain the program. She stated that they have defined the individual tax parcels in the City and stated the necessity of defining this as a Redevelopment District, and seventy percent of the parcels are occupied. Ms. Carlson outlined the areas of the proposed re- development district and the pink areas on her hamp as the Tax Increment parcels. MR. KRIESEL asked about the Finneman Annexation and if this could be included even though it is in a different taxing jurisdiction at the present time. MR. HARTMAN replied it could not be included if the public hearing was held before the parcel was annexed and the statute says that seventy percent of the parcels must have buildings on them, otherwise they would be classified as a different kind of district, and this would upset the balance. He explained further that this is a long-range program and it could possibly be added in the future. This is a major tool for redevelopment that is twenty-five years in length and can help the City with development proposals for a long time. This can be applied to residential areas also. 7:00 P. M. MR. DON NOLDE asked about the boundary lines for the downtown area. MS. CARLSON replied - Elm Street on the north, Third Street on the west. MR. NOLDE suggested it be expanded further west. Discussion followed on expansion of the boundaries. MR. KRIESEL asked how many years we have to expand the empowering district and MR. HARTMAN replied the tax increment parcel boundaries could be expanded for five years. There is no limitation on the empowering district. MR. LANGNESS commented on establishing the financing district and what was going to be done with the money. Replacement of sewer along Water Street was a possi- bility. MR. MARTMAN replied that the plan does not say you have to be specific as to what the money will be used for, but you do have to have a budget and that priorities will change as developments come through. He stated it is important to remember that there are some limitations on tax increment. If you are putting sewer and water to create some new development sites and those sites are close to an area that needs upgrading, that would be acceptable. It is not to be used to avoid special levies. MR. NOLDE asked the length of time allowed to retire the debt. Could be as long as twenty-five years, normally they will run ten to fifteen years depending on what is accomplished. MR. HARTMAN then addressed the increments - they will come from three general areas -- the Industrial Park, vacant site in downtown area, and rehabilitation and historical preservation of buildings that are in the downtown area. The financing plan requires that an estimate be done which Mr. Hartman further elaborated on. He stated that he took a coverage ratio and multiplied it times a per square foot tax to give a rough idea of how much tax would be coming from the industrial sites which is a major portion of the initial estimate. COUNCILMEMBER BODLOVICK asked about the repayment and how this happens on the rehabilitation area. MR. HARTMAN stated there are two questions involved here - how do we use tax increments, and do we get it back; and how does the assessor look at it from a tax increment standpoint. Tax increments are only for purposes of encouraging redevelopment - such as the City buying a building and making it accessible for someone else to rehabilitate for commercial or residential use. You can't use the tax increments and write a check to the developer to fix up the building. The City can ask that none of the money is giv':n back, or the City can ask at some later date that part of it be given back or all of it back in order to start another project. It is like a short term loan to make development more feasible. • • 316 April 8, 1985 - continued • • COUNCILMEMBER KIMBLE stated that the money you are going to make is only to encourage other developers to fix up the property. Bad streets are fixed up, good sewers put in, in order to facilitate commercial use. You will never get all the money back, because at the end of the twenty-five years you have to spend all the money or give it back to the other taxing districts. MR. HARTMAN stated this plan is not for creating a lot of competition, but is meant to do away with blight. MR. LANGNESS stated a concern about fiscal disparities. New growth has to contribute forty percent to the pool which can be done in two ways - one plan says that no tax increment will be paid to fiscal disparities and all money is kept for improvements; the other option is that you give forty percent of your evaluation to the fiscal disparities pool and keep the other sixty percent. The first plan where no fiscal disparities are paid must be made up from the tax dollar. The mill rate will go up if there is substantial growth. MR.LANGNESS noted that the plan as it stands now, says that fiscal disparities will not be taken out of the tax increment fund and he is concerned that the Council be made aware of this point. COUNCILMEMBER KIMBLE asked about the responsibility for ownership by the taxpayer to support this plan. Perhaps eighty percent should go for tax increment and twenty percent of the fiscal disparity will come from this and the other twenty percent will come from the general mill levy. Then the taxpayers will also be supporting the program. MR. NOLDE asked if each project could "stand on its own" without going to the tax- payers for support. MR. HARTMAN suggested that in the first five years the City could take one -hundred percent, and use sixty or eighty percent after that when the program is well established. MR. LANGNESS stated that when Option A or B is selected, it is for the duration of the program. The question was asked if fiscal disparities only applies to commercial situations and the answer is "yes". If the City elected to give some of the tax increment money back to the other juris- dictions, it would make no different, fiscal disparities take forty percent of the valuation times the fiscal disparities mill rate. MR. LANGNESS stated that one or the other has to contribute to the pool and that is his concern. He added, if there are specific improvement projects, that the City wants to complete, and knows what they are and the timing of them, then do an analysis to see if sixty percent would give the City the money. This plan is designed to create some money to make develop- ment work and we don't know exactly when, where, or what form the development will be. MR. LANGNESS' recommendation at this point is that the City keep sixty percent and do what they can. The Council directed Mr. Hartman to add to the plan, in that fiscal disparities would be taken out. MR. HARTMAN stated that there is some inflationary growth,four percent, five percent, etc. per year and this is usually captured by the district. MR. HARTMAN then explained the budget, and this may change as the project evolves. MR. KIMBLE asked if these funds could be used for a project such as a city dock to benefit, for example, the Anderson Boat Co. MR. LANGNESS said this could be put in as a park improvement, but does not qualify as real estate. If this project is in place, is the City restricted from the use of Industrial Revenue Bonds was asked by Councilmember Kimble and MR. LANGNESS replied, "no". MR. KIMKIMBLE LE. asked if the City could buy down interest costs on Industiral Revenue Bonds, LANGNESS replied the payments could he love-:d by a land write -down, but not the former. MR. NOLDE asked if this plan could be used a flood zone. MR. LANGNESS stated this would depend on what kind of development is ::eing considered. The question was rasied as to how flexible the budget is and MR. HARTMAN replied that it is quite flexible and can be changed, but to increase it, a public hearing would have to be held. MR. LANGNESS suggested that the City Engineer work with the staff and determine the areas where tax increment will be used and where street and sewer improvements are needed. MR. HARTMAN suggested that the City should have a list of improvements with dollar amounts identified. MR. HARTMAN summarized the previous discussion by saying that the two main things mentioned is that the City elects list of contribute projectshe thatscal are ins theities pool empoweringand rea the City Engineer will supply a with figures. Some discussion followed regarding improvements on Water and Nelson Streets and MR. LANGNESS suggested that perhaps tax increments can take care of part of it and part could be assessed. • • • April 8, 1985 - continued 31Vm MR. HARTMAN stated that the Department of Economic Development regulates the plan and there is a review procedure by the County and School District, but the Council, only, has the power of veto. The district is not certified until a thirty -day period has elapsed. Motion by Councilmember Kimble, seconded by Councilmember MacDonald to hold a public hearing on May 7, 1985 to consider the Tax Increment Financing Plan for the Downtown and Industrial Park Redevelopment District. (all in favor) MISCELLANEOUS --MR. KRIESEL announced that Police Chief Mawhorter would like to advertise for a police position. Motion by Councilmember Kimble, seconded by Councilmember Bodlovick to approve advertising for a police officer position by the Police Department. (ALL IN FAVOR) - -MR. KRIESEL stated that the City has advertised for the sale of the old computer system and received only one phone call and received a quote of $2,200. Motion by Councilmember Kimble, seconded by Councilmember MacDonald to sell the computer for $2,200. Ayes--Councilmembers Kimble and MacDonald and Mayor Peterson Nays--Councilmember Bodlovick (motion carried) - -COUNCILMEMBER BODLOVICK asked about the Cable audit and if the treasurer could do it. MR. KRIESEL will ask the City Attorney in regard to this. ADJOURNMENT Motion by Councilmember Kimble, seconded by Councilmember MacDonald to adjourn the meeting at 9:05 P. M. (all in favor) Attest: w x/a, A • •